November 21,2008
-
Your Credit Rating(101), Pt.4 –
– Assessing your weight.4) The number of inquiries that have been made concerning a consumer's ratings for the purpose of evaluating credit risk, over the last 24 months. Inquiries for auto loans, solicitations for promotional purposes and in-house or account maintenance inquiries are not included here.
5) The dreaded derogatory items category is something we all hope to avoid. Ever notice how collection notices have ominous notations printed in a conspicuous place on the statement like ("30 days", "60 days", "90 days", etc.)? These are not mere conveniences for your reading pleasure. When that notation reaches "120 days", a consumer can be ‘black-listed'. Now they're carrying "derogatory items" in their rating portfolio. Accounts which have been delinquent for 120 days or more are labeled "in poor standing" if the amount owed is over $100. Bankruptcy accounts are not included here.
6) The number of delinquencies reported over the last six months. This category includes both; reported trade lines (late credit card payments) and serious derogatory items. Items that are locked in dispute are not counted here.
7) Lastly, comes the biggie. Called 'Total Revolving Balances', it shows how much the consumer totally owes. Many things are tallied here, providing total revolving balances owed by a consumer as reported over the last six months. This figure includes:
- The total balance of all open accounts.
- The total balance of all closed accounts.
- The total balance of all unsecured loans.
Not counted here are:
- Debt from lost or stolen credit cards.
- Credit card transactions that are still in dispute.
- Amounts transferred to other credit card accounts (they are counted in the new account, of course.)
- Home mortgages.
- Car loans.
- Educational loans.
This article series has provided a fairly substantial primer for understanding credit card worthiness ratings. For tips on how to improve these ratings, please continue on to the next (forthcoming) article series entitled: "Boost your Credit Rating(201)".